The kid is never going to consider the husband's mother as grandma because they never met.

Oh, I wouldn't say that. The niblings certainly consider my father to be one of their grandparents because, well, he is. The fact that he's dead doesn't mean he's gone - we talked about him when they were growing up, and told stories, and said things like "Granddaddy Bob would've known this" (or would not have known) and so on.